esent and future sources of income, other savings and income protection, group life insurance, pension benefits, Social Security, and, of course, the financial strength of the company.  Here are some tips in purchasing life insurance.

• Make sure the agent and company are licensed to sell insurance. If you buy from an unlicensed company, your beneficiary might not get paid if the company fails. Licensed companies belong to a guaranty association that pays claims for failed companies.
• Check a company’s financial rating and complaint history. To learn about a company’s financial rating and the number of complaints against it, call your state’s Consumer Help Line.
• Shop for a low- or no-load policy. You might save money if you buy a policy with low commissions and fees, which are known as the load. Financial planners who are licensed insurance counselors often sell these policies. They usually charge clients a flat fee.
• Get quotes from several companies. Rates vary by company.
• Compare “apples to apples.” Be sure the policies you compare offer similar coverage. A less expensive policy could have fewer features or a lower death benefit. A more expensive policy might be a better value when you consider the amount of the death benefit per premium dollar. Don’t choose a policy on price alone.
• Know how much coverage you’re buying. Talk to your agent about the coverages and amounts you need. Think about how much you’ll need to help your dependents after your death.
• Know how much your policy will cost. Your company should tell you exactly how much your policy will cost. If you’re not OK with the cost, ask the company if they have a different policy.
• Use your free-look period. Most policies have a free-look period of at least 10 to 20 days. During this time, you may cancel the policy for any reason and get a full refund. Use this time to be sure the coverage is right for you.
• Review the information an agent gives you. Agents often use charts to show how a policy’s cash value might grow. These are usually projections and aren’t a promise of a policy’s performance. You could earn less than the projection. Ask for a history of the actual growth of cash values.
• Watch out for illegal acts. Agents can’t offer you a gift or a discount on an investment or loan to encourage you to buy life insurance. If you think an agent has made an improper offer, call your states’ Consumer Help Line.

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Teaching Suggestions:

• Ask students why it is important to understand and know what your life insurance needs are before you make any purchase?  Also, why is it important to review the company to ensure they can meet your needs?
• Ask students if they check their coverage periodically, or whenever their life situation changes, to ensure that it meets their current needs.

Discussion Questions:

  1.  Why is it important to know the ratings of the insurance company?

  2.  What should you do in examining a policy before and after the purchase?